Mallorca spousal inheritance tax falls to zero under Law 6/2025

Black Privé says Mallorca’s 2025 tax changes have cut spousal inheritance tax to 0% and can eliminate wealth tax on a jointly owned EUR 5 million villa. The new rules also may let non-EU owners deduct rental expenses again, but that change is still being challenged in court.

Why it matters: - Mallorca property ownership now carries very different tax outcomes depending on how a home is held. - A married couple can reduce annual wealth tax on a EUR 5 million villa to zero through joint ownership. - Close relatives can now inherit Balearic property tax-free under the new exemption. - Cross-border owners still face UK inheritance tax exposure that Spanish reforms do not remove.

What happened: - Black Privé released a new analysis of Mallorca property taxes for ultra-high-net-worth buyers. - Law 6/2025 took effect on 25 July 2025 and grants a 100% inheritance tax exemption for spouses, children, parents, grandchildren and grandparents on Balearic property. - The same exemption applies to lifetime gifts. - The Balearic wealth tax exemption rose from EUR 700,000 to EUR 3 million per individual in January 2024. - The Audiencia Nacional ruling in Case 636/2021, Judgment 3630/2025, changed the treatment of non-EU rental income in July 2025.

The details: - A child inheriting a EUR 5 million Mallorca property now faces zero Spanish inheritance tax. - A UK-domiciled owner of the same property still faces about EUR 2 million in UK inheritance tax above the GBP 325,000 nil-rate band, based on 40% tax on worldwide assets. - Joint ownership of a EUR 5 million property keeps each spouse below the EUR 3 million Balearic wealth tax threshold. - Single owners of the same property pay about EUR 47,000 a year in wealth tax. - The national Solidarity Tax applies above EUR 3 million, but regional wealth tax already paid can be fully deducted. - Before July 2025, non-EU residents, including UK nationals after Brexit, were taxed at 24% on gross rental income with no deductions. - The July 2025 ruling allows deductions for IBI, community fees, insurance, utilities, management fees, repairs, mortgage interest and 3% annual depreciation of building value. - The Spanish Treasury has appealed the ruling to the Supreme Court. - Until that appeal is resolved, non-EU owners can file Modelo 210 and claim deductions while the legal position remains contested. - Resale property is subject to transfer tax from 8% below EUR 400,000 to 13% above EUR 2 million. - A EUR 5 million resale property carries a EUR 600,000 transfer tax bill. - New construction is taxed at 10% VAT plus 1.5% stamp duty, rising to 2% above EUR 1 million. - A EUR 3 million new-build costs EUR 360,000 in combined VAT and stamp duty. - Annual charges scale with cadastral value, which is typically 40% to 60% of market value. - IBI rates range from 0.68% in Deià to 0.79% in Palma.

Between the lines: - The main tax variable is no longer just price. Ownership structure now drives the biggest difference in annual cost. - Black Privé says joint ownership is the best fit for EUR 3 million to EUR 6 million properties because both spouses stay under the wealth tax threshold. - Spanish SL companies bring transfer tax on share transfers and EUR 2,000 to EUR 4,000 in annual compliance costs. - Offshore companies face a 3% annual imputed income tax on cadastral value and enhanced scrutiny, and Black Privé does not recommend them for residential property.

What's next: - The Supreme Court appeal will determine whether the July 2025 rental deduction ruling stands. - Buyers are likely to keep focusing on deed structure, residency status and entity choice before closing on Mallorca homes. - Black Privé says its full Mallorca property taxes guide includes worked calculations across price brackets, residency scenarios and ownership structures. - Black Privé also continues to publish curated Mallorca listings starting from EUR 3 million.

The bottom line: - Mallorca’s tax regime now rewards careful structuring as much as property selection, and the gap between a solo buyer and a jointly owned purchase can run from zero to tens of thousands of euros a year.